Top 4 Ways To Price SMMA or Media Buying Services in 2021
How should you price SMMA Paid ads or Media Buying Services?
Here are the Top 4 Ways to Price your services in 2021:
These are the most common pricing models for Paid ads or Media Buying services:
1) Fixed Fees
2) Commission-based
3) Hybrid model
4) Rev Share Models
Fixed fees — This is where you simply charge a flat rate each month for running the ads. You’re not charging the client for the ad spend or anything like that. The ad spend goes directly between the client and the social platform your advertising on.
The pros: This is a very attractive pricing option for some agencies and clients because it’s predictable, simple, and there are no surprises.
When getting to the pricing stage of a proposal, the last thing you want to do is confuse the prospect with some super complicated pricing model, where they need to be a math wizard, just to figure out how much they are going to have to pay you.
Cons: If you’re working with a client that wants to aggressively scale with their goals, revenue, ad spend, you’ll be pressured to do more for the same rate.
Simple steady lead gen clients, this is a great model…aggressively scaling e-commerce companies, this is a model that can quickly become unsustainable.
Commission-based
This is a very common model amongst most large-scale agencies where they simply only charge anywhere from 15–30% off the overall ad spend.
For example, the client spends 10,000 a/mo in ads you get 3,000
Pretty simple. Many times with this model you’ll want to have minimums in place.
Having a client spend 50 bucks a month you get 30 % of 50 bucks makes no sense.
The setup process, time, creativity … 30% of 50 dollars.. no thanks..
Hybrid model
So the hybrid model is a combination of the fixed fee and commission-based model.
For example, say your fixed fee retainer is 2k and this is the minimum you want to take home for running ads. Now a protection you can set in place is to create a percentage or commission-based model on top of that.
So you would tell the client once they spend over 6700 bucks ( or around that area) you would tip over to a 30% of ad spend model.
This way you’re protected and your fee scales as they do.
Rev Share Models
If you’re working with info-product clients or E-commerce clients, you’ll realize quickly that every month they will want to see bigger and bigger numbers.
That means each month you’ll be pushing the boundaries of your ad spend and bringing in more revenue for the company.
With a rev-share model, you would get a percentage of profits beyond your retainer.
So again, say you charge 2k… once the profits scale beyond your fee, it switches over to a percentage of revenue model. This percentage is really up for negotiation.
If you’re working with a well-established business and they already have a funnel, creative for the ads, a compelling offer, and a solid understanding of their audience…
You probably will get a lower commission on the sales.
But if this is a fairly new startup and they have none of those elements in place…this is a great opportunity for you to go a bit above and beyond…only if you can negotiate a higher rev-share model.
So those are the four ways you can charge your SMMA clients for ads or media buying. Again…
Fixed Fees
Commission-based
Hybrid model
Rev Share Models
I recommend if you’re just starting out as a beginner, keep your pricing model simple.
A confused mind, typically will never buy from you.
So make sure to keep it simple and just focus on getting the deal and getting some experience under your belt.
Once you’ve got a little experience and are driving results, try and renegotiate to some of these more long-term lucrative models where your fee increases with more ad spend or more profits.
So now you should have a solid understanding of the various ways you can price your media buying services through your SMMA.
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